Ryan FowlerThe number of people over the state pension age is projected to rise by nearly 14% from 12 million in 2022 to 13.7 million by 2032, according to the Office for National Statistics (ONS). This increase comes despite the state pension age being raised to 67 in 2028.
Conversely, the number of children in the UK is expected to fall by more than 6% during the same period. While births and deaths are anticipated to balance each other out at 6.8 million each, the UK population is still projected to grow to 72.5 million by 2032 due to net migration of 4.9 million.
The growing number of pensioners is compounded by an ageing population, with those aged 85 and over expected to double from 1.7 million in 2022 to 3.3 million by 2047, making up 4.3% of the population.
Rachel Vahey, head of public policy at AJ Bell, described the implications of these demographic changes:
“The size and the make-up of the UK population matters when it comes to pensions. We are experiencing an ageing population, with the 1960s ‘boomer’ generation now reaching state retirement age, boosting the number of UK pensioners by a whopping 14% over the next 10 years.”
She highlighted the challenges posed by the shift: “Whilst more people living longer should be something to be celebrated, a growing pensioner population puts more pressure on public finances to fund state pensions and provide care in older age. The ratio of working people to pensioners has to at least remain stable to make sure sufficient taxes are rolling in to help pay for these burgeoning costs. But with a falling birth rate that ratio looks fragile.”
Vahey noted that increased migration could help alleviate some of the pressure: “The ONS figures today point to an increase in migration to help steady that ship. A swell in the working age population should at least help ease some of the financial pressure, but it won’t completely solve the problem.”
She also called for urgent action to address the long-term sustainability of pensions: “The UK needs a frank and open discussion about pensioners’ income in later life. Instead of kicking conversations about the state pension down the road, we need a full debate on how much the state pension should be, when it should be paid and how it should increase each year.
“The government has already shelved its promised review of UK pensions adequacy. It now needs to kick that back into action to examine if the UK is on course to be able to finance itself in old age. These figures make it clear there isn’t time to spare by putting this on the back burner. Making significant changes will take time, so we need to tackle these challenges today.”
